The skyrocketing natural gas prices resulting from Russia’s war in Ukraine is hitting Italy hard, with everything from steel mills to fishermen affected.
Italy is Europe’s third-largest economy, and 40 percent of its electricity is generated with natural gas supplied by Russia, compared with roughly one-quarter in Germany, another major importer, and the continent’s largest economy.
While Europe was already struggling with a post-pandemic economy in need of getting back on its feet, the Russian invasion of Ukraine and the resulting sanctions have caused even higher energy prices tied to fears that the conflict will lead to a cutoff of oil and gas from Russia.
Italy has been hit particularly hard by the energy crunch, in part, owing to its dependence on Russian oil and gas. Paper mills, steel mills, and other industries have been forced to suspend operations.
As CTV News Canada reports, over the past decade, Italy has increased its dependence on Russian natural gas – from 27 percent to 42 percent – a fact lamented by Premier Mario Draghi.
To try and counter this crisis, European leaders met Friday in Versailles outside Paris to discuss how they could ease the pain, reports USNews. Italian Premier Mario Draghi suggested diversifying gas sources, developing renewables, and introducing a cap on natural gas prices.
Draghi said his foreign minister, who recently visited Algeria and Qatar, was working on new gas markets.
“We are talking about errors made over many years,” said Francesco Zago, CEO of the Veneto-based paper and packaging manufacturer Pro-Gest. “We get too much gas from Russia. In school, they tell us we need to diversify the sources, otherwise, there is a danger.”
With prices soaring from 90 euros a megawatt-hour to over 300 euros a megawatt-hour, Zago said, “We found ourselves facing huge losses.”
He suspended operations at six mills that recycle paper to supply one-third of all of Italy’s packaging needs, and he is keeping a close eye on the energy market to see when production can relaunch.
Likewise, Acciaierie Venete shut three of its steel mills for a few days last week as prices spiked to 10 times above normal. The makers of high-quality steel for automotive and agricultural machinery had enough stock to work on the finished products, waiting for prices to dip so they could reopen.
The urgency of Italy’s energy situation is trickling down to consumers in the form of higher heating bills, and more recently, rising prices at the pump, with gasoline topping 2 euros a liter this week, or nearly $6 a gallon.
